Forex signals are best described as detailed recommendations or trade ideas. The best forex signal sources are usually experienced traders. Scores of online entities that provide forex trading signals, for a fee or even for free.
Due to the fact that a forex signal is essentially a small bundle of text-based information, one can transmit it through a variety of channels. Forex signal providers will distribute their products online via direct messages, email, Skype and various dedicated applications. There are even forex signals Telegram channels.
The trading signals ecosystem has also created full-featured, dedicated trading environments. Such signal-based trading solutions allow signal providers to use interactive charts, stream videos and monetize their operations.
Profitable trading is the Holy Grail of many people. For most traders, the simplest path to these profits leads to forex signals.
About Forex Signals
The Forex signal system is one of the most important tools in the arsenal of profitable traders. Beginners as well as advanced and experienced traders use them.
There is practically an entire industry built around various trading signals and trading recommendations.
As with most commodities, quality should always precede quantity with regards to your forex signals.
Quality forex signals don’t just tell you when to jump into a certain trade and the aforementioned trade direction. They also include detailed information about your Stop Loss and Take Profit configuration.
The best way to be sure that you are dealing with quality trading signals is to use the free option on the Demo account. This way you won’t lose any real money if it turns out that your signal is sub-par.
Time frame
You should also pay attention to the timeframe. Due to their nature, trading signals do not work well for strategies like scalping. Once you get the signal, the opening opportunity has come and gone.
That said, there are scalpers out there that still use a signal service.
Each FX signal system is a reflection of the signal provider’s personal methods and preferences. Therefore, each such system is different.
However, there are two big categories that fit all of them:
- Based on technical analysis
- Focused fundamental analysis.
TA based forex signal systems derive their trade ideas from past price movements along with various mathematical components.
Signal providers analyze current events and derive their trade opportunities from the possible impact of those events on asset prices, which fall into the second category.
Looking for the best Forex signals
The quality of your forex trading signals will make or break your profits. Since there really isn’t much skill involved in applying these signals, the only variable in the equation is the choice of a forex signal service.
You should always go through this short checklist before you make a move on this.
- Time Zone – Before you begin, check your provider’s time zone. You want your trading signals to drip while you are awake. They are not used much. If there’s no other way to learn this essential bit of information, sign up for a free account.
- Free Trial – Sign up for a free trial/flavor period. This will give you a clue about the quality of the service, without requiring you to pay tuition fees in the form of losses arising from bad signals.
- Compare – Don’t get stuck with the first service you like. Keep searching and comparing FX signal services that you feel are right for your trading style. Finally, pick out the best one.
- Tracking Profile – Take a close look at your forex signal provider’s track record. This will tell you everything you need to know about the performance-wise setup. Only profiles verified by 3rd parties should be followed. One such verification service is MyFxBook.com.
- Full Analysis – Go for the whole package. Low effort signal providers, such as those that only give you the entry price and SL/TP, should be ignored. You need to know why your signal is supposed to work. For that, you need an FX signal provider to provide you with the right charting and market analysis.
- Focus on you – Make sure the signal type suits your trading needs. Besides the two basic types mentioned, Forex signals run a wide range of patterns. There are short and long term signals, signals focused on intraday breakouts and so on. Profit is always your priority. However, you will find it easier and more enjoyable to use cues that suit your personal style.
- Also – If possible, choose a signal provider that offers additional services. These services can be educational or socially transaction oriented. Provided you are dealing with quality trading signals, such perks can add a lot of value to the setup.
Finding forex MT4 signals is another story. In the Terminal window, there is a Signals tab. This section features scores of trading signal providers with handy charts of their trading performance.
Compare signal providers
Comparing forex signal providers can be a bit laborious. However, it will yield consistent dividends, because every bit of value you discover through this process adds to your profits.
Run a search on forex signals charts. There are many websites out there that compare signal services. Pick up a few of the top ones and take a closer look at them.
Read forex signal reviews provided by said comparison sites.
Sign up for the trial they offer and use the checklist above to determine how well they stack up. Take into account the communication channels that suppliers use. Do they distribute their products online via Skype, email, SMS or Telegram? Do they use dedicated platforms?
Choose the one with the most points on your list.
- Forexsignals.com – Live streaming and cash giveaway, forexsignals.com offers signals and education in a balanced way.
How to use signals
Opening a position based on forex trading signals is a simple exercise. Once you learn to read these signals, you will have to walk in the park to use them.
- – Your first step is to log into the signal provider’s channel. This can be a website, Telegram channel, Skype chat, etc.
- – Take the data provided by the signal provider and copy it to your account.
- – Wait for the transaction to close and receive the proceeds.
What is included in the best signals?
More precisely, a signal will tell you the following:
- The instrument/currency pair you will be trading (EUR/USD, BTC/USD, gold, silver, etc.)
- Your trading direction. Besides the actual asset price, a BUY or SELL action is indicated.
- Your signal status. Regarding status, forex signals can be Active, Ready and Closed.
- The active signal can be put to use immediately. Ready Signals are not active yet, but they may become so shortly. They can also disappear. Keep an eye on them, but don’t act unless they become Active.
- The close signal has expired.
- Entry prices are self-explanatory. That’s the price the vendor recommends you jump into the deal.
- Stop Loss is where your trade will automatically close, if the market turns against you. This is a damage control feature and as such, it is very important for long term profits. Make sure you don’t forget to set it, as recommended by your FX signal.
- Take Profit is the price at which your trade is automatically closed, if it goes your way. Taking your profits at the right time is just as important as protecting yourself through Stop Loss.
Comments, charts and explanations regarding suggested trade setups.
You should note that trades can be closed in three different ways. Besides automatic closing triggered by SL or TP, the provider can also close manually.
When a suitable combination is found, the supplier will offer to close the transaction. In such cases, explanations are provided in the comments section, along with closing prices.
In certain cases, the signal provider may even offer to extend the TP, to increase the profit margin.
How to use different types of trading signals
Interestingly, sometimes, to maximize the potential of your trading signals, you just have to disobey them. Or rather: you should adjust some of the variables that make up them.
Moving your profits is an obvious way to expand profit potential. Most forex signal services use a fixed amount of pips when setting the take profit as well as the stop loss. They rarely jump in to adjust these variables as the trade opens.
Take profit and stop loss
If you think the potential of the trade is better than the allowable profit, feel free to move it. In some cases, completely eliminating returns is in order. Just remember not to hold the signal service responsible if your daring moves backwards.
Moving your stop loss can in some cases save a committed trade. Like take profit, the stop loss is set to a fixed number of pips. Moreover, it sometimes lands just below the moving average or resistance level. In such cases, moving it above the critical might be a good idea.
The entrance price is also not set in stone. In this case, too, the signaling service prefers to fail on the safe side. As prices develop, better entry prices may also develop.
Manually closing a trade can be the right course of action when asset prices are rattled by an unexpected real-world event. There is no way for the signal provider to predict such events. If someone comes, the bet is obviously off.
Transaction size
Blinking with batch size is another avenue of signal optimization. Some of the FX signals provided by the service are obviously higher probability signals than others.
As you gain experience, you will be able to tell which trades to take. Increasing your trading lot size on high probability signals makes perfect sense. The same is true of reducing your trade amount on low probability signals.
Correlate
Keeping an eye on correlated FX pairs often makes sense. If you get a signal for AUD/USD for example, the same signal can be applied to the NZD/USD pair as well. Usually, the trade that originates from these methods through this method will be more profitable than the initial trade suggested by the signal.
Traders sometimes forget about the spread to the account when setting stop loss and take profit. Don’t make this mistake. Adjust your auto close point accordingly. Remember that this spread varies from FX pair to pair.
Free Forex Signals
Signal service providers often use free forex signals for promotional purposes. They get them ready to find a way to sell some sort of follow-up service or product.
As a promotional vehicle, free forex signals really can’t afford to be of lesser quality. However, sometimes, that’s exactly what transpires.
High-class
A premium signal service needs to be delivered from the start. Since such premium forex signals represent the service provider’s bread and butter, they are usually of outstanding quality.
Let’s not lose sight of the facts however no signal provider will guarantee a winner. No one will come up with just one winner.
Live / Daily Signals
Live/daily trading signals are essentially forex signals, delivered with a higher frequency. Hence such signals are more suitable for day trading.
Copy trading and social trading
Social trading or copy trading is about using the trading signals provided by more successful traders.
As mentioned, MT4 offers a Signals section, where it displays the trades and statistics of those who decide to share this information with the community.
The system rewards such traders for their signal provisioning service, through fees paid by their subscribers.
The Signals page shows the most successful forex signal providers at the top. In this way, it more or less takes care of the signal service selection for the user.
There are quite a few similar (and even better) copy trading services out there. eToro is a good example of this.
Forex signals for technical analysts
For traders focused on technical analysis, the use of forex signals opens the way to a much more complete trading experience. Most relevant forex signals also take into account fundamentals. By using such signals, TA traders will also bring their trading to the fundamentals.
TA is usually suitable for short-term trading, price changes due to inefficient supply/demand. On the other hand, fundamentals lend themselves much better to longer, longer timeframe trades.
Price action
Forex signal providers give most of their tips/ideas based on price patterns. These patterns mainly consist of support and resistance levels. Other technical indicators and price structures/patterns can also be used.
This is really the definition of TA based forex signal generation.
Forex Signals for Scaling
While long term trading signals aim to profit hundreds and even thousands of pips, there are some FX signal providers that will settle a few pips at a time. These providers offer short term forex trading signals that lend themselves well to scalping.
What are some of the main applications of signal-based replication?
In times of uncertainty, when long-term trading signals don’t seem to cut through, it offers a different approach. Sometimes traders simply can’t figure out a market. Falling back on the scale is the sound reason in such cases.
However, if you are looking to use such signals, you will have to spend a lot of time in front of a computer screen.
Some forex markets are just large, long consolidation markets. While the market does move during such periods, it does very slowly. Those who are impatient may once again fall into the forex signal-based scale. This way, they will cash out on the day’s price change.
The highly volatile markets are also not particularly friendly to long-term trading. In such conditions, scalping is again a sound option.
Despite their short-term nature, scalping signals are not solely based on technical analysis. They certainly incorporate a fair share of the fundamentals too. In this way, they combine indicators like trendlines, support and resistance levels, and stochastic oscillators with economic news, data releases, and announcements.
Cheat
The pseudo science behind the forex signals industry is not an exact one at all. Therefore, it is beneficial for scams.
Crooked operators have plenty of room for this vertical maneuver. Although we have filtered out suspicious scam services, you should be able to spot forex scam signals for yourself.
- Services with an unreasonable (and unverified) track record are almost guaranteed to be scams.
- The signal providers Fx offers to trade on your behalf, with your own money, are definitely scams. Such a setup is no longer signal-based trading, but automated trading on a hacked account.
- If a supplier uses different advertising and promotion methods, it also raises suspicion.
If you feel like there’s something off-putting about your signal provider, forget it and move on to the next.
Key point
We hope to cover everything you need to know about choosing and using forex trading signals.
A good signal service will have a significant and immediate impact on your profits.